Australian corporates are “doing innovation all wrong” as the world is “accelerating away,” Startup Catalyst CEO Aaron Birkby says.
Mr Birkby has just returned from Startup Catalyst’s two week trip to Europe, which saw the organisation take a group of 20 investors, startup founders, accelerator leaders, university faculty and public servants to explore the startup communities in London and Berlin.
After returning home, Mr Birkby said he was left reeling at how far behind Australia has fallen, and what needs to be done to get back on an even footing.
“I returned home frustrated that the rest of the world is accelerating away from us, but massively inspired that we can and must do more. Europe is crushing it, a silent tsunami is building and we have to take things to the next level in Australia or we’re dead,” he wrote in a blog post.
While local tech and entrepreneurial communities are developing in Australia, it’s all happening at a significantly more rapid pace abroad, he said.
“Aussies fixate on Silicon Valley and North American but we forget about these other markets which have incredible population density and really active corporate engagement, and a corporate sector that is very keen to work with startups,” Mr Birkby told InnovationAus.com.
“The pace and scale in London, even from last year, is absolutely booming. There are armies of entrepreneurs on mass everywhere.”
Mr Birkby said that the level of corporate engagement with the tech and startup world is a key area where Australia had fallen behind. Across Europe, large corporates were working alongside early-stage founders, and actively assisting them and looking to acquire the companies.
But in Australia, he said corporates are “doing innovation all wrong” and often engaging in “innovation theatre” that is too heavily focused on transactions.
“The corporate sector here needs a change of mindset. In Australia, every interaction has a transactional element,” Mr Birkby said.
“In Europe, the attitude is that they invest time in random meetings because they have no idea what’s going to come out of it, and that’s the exact point.”
After a visit to a corporate innovation space in Berlin, the Startup Catalyst cohort were left stunned by how open and transparent the operations were compared with how things work in Australia.
“The response we got from them was, ‘we don’t know who you are, but we have no secrets and this could spawn the next innovation’. It’s an incredibly open book over there,” he said.
“In Australia all the corporates are behind secure doors that are only accessible by their own staff. There’s no real integration with the startup community.
“We haven’t hit that co-design model in a way that isn’t just transactional. We need a shift in the conversation to make it about R&D.”
There’s also a lack of awareness and recognition in Australia of how important corporate engagement is in the growth of the startup sector. Many young tech companies setting out to disrupt entire industries rather than work with the existing incumbents.
“Corporate engagement is critically important, and in Australia I don’t think we fully realise that. We need success stories, exits and acquisitions, and that comes out of corporate trade sales. We need more corporates buying startups, co-designing, investing and acquiring,” he said.
But Mr Birkby hopes to speed up the process and bring back some of the successful programs from Europe to the Australian context.
“I think we can fast-track it. We can take corporates and expedite their journey, and bring back the programs that re working over there,” he said.
And while government support is important in changing the general culture, founders shouldn’t be relying on Commonwealth funding or waiting for policy changes, he said.
“I’d love to see Commonwealth funding programs like Catalyst, like governments do in Singapore and Germany. They’re sending hundreds over there and we need to scale up that cultural transformation,” Mr Birkby said.
“The Commonwealth has gone very quiet on language, but I’m not an advocate of government interaction. This has to be grassroots up, entrepreneur led. There’s been that much policy change that we all need to just get on with it and execute.”
Mr Birkby also slammed Australian founders for focusing on niche issues and targeting small local markets instead of looking globally.
“Our talent is incredible and really highly regarded around the world, but we work on tiny, small market stuff. We need more local founders working on truly global opportunities solving real problems,” he said.
“We need to reprogram more Australians to have the global mindset, to work on epic shit and to target massive markets,” he said.
“Work on something that will shift the needle, and stop whinging about how you had to kill your startup because the government didn’t give you a handout.”